We’re concerned. You should be too. Our biggest concern isn’t just the size of the federal budget deficit, which, according to the non-partisan Congressional Budget Office, will exceed $1.0 trillion a year, really, for pretty much as far as we can see into the future. No, our biggest concern is that no one, absolutely no one, in the White House, anywhere else in the Administration, or in either political party really gives a damn. The tax revenue surplus we were supposed to get from the 2017 tax bill, which was, we were told, going to rev up the economy so much that it was going to pay for itself, has actually petered out. Reduced tax revenues and additional new spending are now driving our nation’s deficits to projected new heights, not reducing them.
We had some trillion-dollar deficits during the Obama Administration, but they were pretty much a function of the enormous “Troubled Asset Relief Program” with which the Obama Administration was saddled to bail out the economy from the credit excesses and the wars that were fought in the prior Administrations. That was acceptable because in economically stressed years governments spend heavily to prop up their economies. Then, in really good times, wise administrations reduce deficits so that they have the fiscal wherewithal to face down the next economic haymaker that comes along. That’s what wise Administrations do.
But we haven’t seen “wise” for a long time. “Kicking the can down the road,” has become part of the American lexicon. Sort of like, “as American as apple pie,” or “it’s the American way” or “make America great again.” These deficits, of course, simply pile onto the nation’s debt, and the debt owed to the public will, by the end of the next decade, approximate the size of our entire economy. In fact, it’s already about 80% of the size of our entire economy. And that only accounts for the debt our country owes to the investing public here and abroad. On top of the public debt, we owe nearly $3.0 trillion to the Social Security Trust Fund and the Federal Disability Insurance Trust Fund. Yes, we dip into those cookie jars too, as well as a variety of other government agency trust funds. Here’s the thing, as we wrote at the top of this essay, few people really give a damn. It not because knowledgeable people don’t think it’s a problem. It just that they know it will be someone else’s problem. That would be our kids and our grandkids, and that’s a shame because they are certain to have emergencies of their own to fund with their tax dollars and additional debt.
The prevailing wisdom, or what passes for wisdom in Washington, is that deficits and the debt that follows are not really a problem because our debt is denominated in US dollars and, if push comes to shove, we can always print the dollars we need to pay our debts. And that, dear reader, is the rock-bottom fiscal foundation on which our spend-and-borrow politicians and bureaucrats govern.
The deficits and the debt they cause are major problems and a sad commentary on our sense of responsibility as a nation. We’re not rebuilding our crumbling infrastructure, building beautiful new highways, or bridges or 21st-century airports or rapid rail systems with all the deficits and debt we’re incurring. We are, instead, investing in a wide range of entitlements, building new and stronger military assets, contemplating a new Space Force, and trying to figure out to pay for a Green New Deal. We are currently spending a billion dollars a day just on interest, and remember interest rates are very low today. Soon the interest on our debt will be larger than what we spend for all government programs combined except for the military.
The deficit/debt spiral is also seriously exacerbated by the confluence of two inescapable realities. Americans are aging into retirement at a very rapid rate. The over-sixty-five population is now double what it was in 1970, while the birthrate in America is declining. Thus, the demands for social security and Medicare benefits will spiral up while the resources to pay for those benefits will spiral down. We need a political candidate who is willing to seriously and intelligently address this issue, and then we need to elect him or her. The sooner, the better.
Fortunately, there are many individuals, investment funds and foreign governments that help keep us afloat by eagerly buying our debt and keeping our interest rates very low. Unless, of course, some of our major creditors, say, like China, which holds over a trillion dollars worth of our debt, and which is our largest foreign creditor, decides for some unfathomable reason that they don’t like us very much and begins to sell the US debt they currently own…but, then again, why would they do such a thing?